Forint Caps Biggest Four-Day Rally in Month on Hungary IMF Talks

The forint capped the biggest four- day rally in almost a month as the government held talks with the International Monetary Fund and European Commission on a bailout package.

The forint appreciated 0.6 percent to 284.66 per euro by 5:04 p.m. in Budapest, bringing its advance in the past four days to 1.8 percent. Yields on the government’s benchmark 10- year bonds fell seven basis points to 7.358 percent after falling to 7.347 percent, the lowest level since September, on July 16. Hungary’s credit-default swaps were little changed at 481 basis points, matching the lowest close since October 27.

The government began talks on a credit line yesterday, eight months after requesting the aid, after resolving a dispute on legislation which threatened the independence of the central bank. Hungary wants to cooperate with the IMF as the country needs a credit line to help cut borrowing costs, Prime Minister Viktor Orban told reporters this week.

“The introductions happened, and despite the expected difficulties the market is assigning an increasing probability to a successful conclusion of talks,” Levente Blaho and Adam Keszeg, Budapest-based analysts at Raiffeisen Bank International AG (RBI), wrote in a research report today.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net